Biohaven Pharmaceuticals hits the market with a big bang
Biohaven Pharmaceutical Holdings is a US-based firm that’s working on getting drugs to deal with migraines and other brain disorders in the market. The clinical trial stage company listed on the NYSE market. It’ll trade under the stock label BHVN.
The company, headed by CEO Vladimir Coric, is working on several products that it hopes will be the best in their class or first-in-class when production starts. All Biohaven products are aimed at reducing the effects of migraines, and minimizing the symptoms of other diseases. The company has been in operation for some time now but currently it’s not selling any of its products.
Biohaven Pharmaceuticals had priced its shares in the $14 to $16 per share price range. On Friday, Biohaven hit a high of $17 per share. This price tag was at the time of close, but the shares had gone for as high as $20 each when the company first opened for trading. Biohaven Pharmaceuticals had expected to rake in an estimated $130 million for the IPO. Instead, the firm hit the $168 million mark on Friday by selling 9.9 million of its shares at $17. Among the deal’s joint managers were Morgan Stanley, Barclays Capital, Piper affray as well as Needham & Co. and William, Blair & Co.
Before the share offering on Friday, Biohaven had generated its revenue from the sale of its class A and class B shares to private investors. The biotech company had also obtained loans from firms such as Wells Fargo Securities to supplement its income. These sales were the company’s sole source of revenue. That meant that any losses Biohaven makes in developing its products more severe to the company’s financial state. These losses had stacked up to $75.5 million by the end of the twelve month period ended December 31st, 2016.
The success of Biohaven’s initial offering is attributable to two factors: its licensing partnerships with more established Big Pharma companies and the success of its products in the trial phases.
Biohaven’s partnership with BMS and AstraZeneca made it attractive to potential investors. At least they were assured of the company’s future performance. When Biohaven’s products are fully developed these partnerships will ensure its products are easily approved, produced and marketed. As such, Biohaven would be earning returns from its products much earlier than any biopharmaceutical firm without a partner would.
Additionally, most of the products that Biohaven is currently testing out in the clinical trial stage have had positive reviews so far. The BHV-3500, BHV-0223 and the BHV-5000 have shown promise in the treatment of the Rett syndrome, amyotrophic lateral sclerosis, and migraine prevention respectively. One primary product called Trigriluzole has proven effective in treating ataxia and will be moving into the Phase 2/3 stage post-IPO. The other main product, Rimegapant, has been so successful in its first two stages that Biohaven has postulated that it will be a best-in-class drug in treating migraines at the end of its development. Investors should be hopeful and wary of that statement.
Proceeds from the IPO will go into repaying debt, purchasing obligatory shares and funding further trials.